The number of U.S. borrowers who owed more on their mortgages than their homes were worth increased by several hundred thousand. The average loan-to-value in the worst state was 120 percent, while the state with the best position had just a 50 percent average LTV. The outlook this year is for deterioration.
Upside-down borrowers totaled 11.0 million during the fourth quarter, CoreLogic reported Tuesday.
There were just 10.8 million borrowers with loan to values in excess of 100 percent in the third quarter, according to the data service provider. The deterioration since the third quarter was attributed to home-price declines in the final three months of last year.
Still, the country is in better shape than in the fourth-quarter 2009, when negative-equity borrowers totaled 11.3 million.
Factoring in borrowers who had less than 5 percent equity, the total jumps to 13.5 million mortgages — or more than a quarter of all residential mortgages.
There were 47,913,991 U.S. borrowers who owed $8.782 trillion on their mortgages as of the fourth quarter. The average U.S. LTV was 70 percent, the same as it was at the end of 2009.
The negative-equity problem was worst in Nevada, where the average LTV was 118 percent. Nearly two-thirds of Nevada borrowers were under water.
In Arizona, more than half of the state’s borrowers had LTVs above 100 percent and the average LTV was 95 percent. In Florida, 47 percent of borrowers were upside-down and the average LTV was 91 percent.
Other problem states included Michigan, where the average LTV was 84 percent, and Georgia, which had an average LTVÂ of 81 percent.
Based on the sheer number of negative-equity mortgages, California’s 2.2 million was highest — though Florida’s 2.1 million wasn’t far behind.
New York’s 50 percent LTV was the lowest of any state.
Negative equity is expected to increase 10 percent this year based on an expected 5 to 10 percent in home-price declines during 2011.
Mark Fleming, CoreLogic’s chief economist, said in the report that the mortgage finance market will remain “very sluggish” until the high level of negative equity recedes.
CoreLogic explained that the qualified residential mortgage designation set forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 will likely mean that a 20 percent down payment will be more common. But states with high average LTVs will be hurt by such a move because so many borrowers will not have enough cash from their prior sale to make a 20 percent down payment.
